PHL stocks jump as Federal Reserve turns dovish

By Arra B. Francia, Reporter
LOCAL SHARES jumped on Thursday along with most of regional markets as investors cheered the US Federal Reserve’s decision to keep interest rates steady.
The benchmark Philippine Stock Exchange index (PSEi) edged higher by 1.22% or 96.52 points to close at 7,954.72 yesterday. The broader all-shares index likewise climbed 0.85% or 41.30 points to 4,888.79.
“Mainly, it’s the dovish move by the US Federal Reserve wherein they abandoned their increase in interest rate policy due to no movements in inflation rate,” Diversified Securities, Inc. Equities trader Aniceto K. Pangan said in a text message.
The US Federal Reserve decided to keep interest rates within the 2.25% to 2.5% range during its two-day policy meeting. It also changed its 2019 outlook to no policy movement after two increases projected back in December, pointing to the slower economic growth in the fourth quarter of 2018.
“This will favor the Philippine market as this will provide liquidity on low rates for its expansionary program such as infrastructure, government, as well as private sector spending, etc.,” Mr. Pangan said.
Asian indices also welcomed the Fed’s decision. Japan’s Nikkei 225 added 0.2% or 42.07 points to 21,608.92. The Shanghai Composite gained 0.35%, while South Korea’s Kospi index also went up 0.36%.
In contrast, Wall Street was mixed on Wednesday. The Dow Jones Industrial Average slumped 0.55% or 141.71 points to 25,745.67 while the S&P 500 index went down 0.29% or 8.34 points to 2,824.23. The Nasdaq Composite index was higher by 0.07% or 5.02 points to 7,728.97.
Regina Capital Development Corp. Managing Director Luis A. Limlingan also attributed the market’s performance to the Fed.
“With the FOMC (Federal Open Market Committee) indicating no further rate hikes in 2019, investors bought into local shares ahead of the BSP (Bangko Sentral ng Pilipinas) meeting,” Mr. Limlingan said in a mobile phone message.
The BSP decided to keep interest rates steady during its Monetary Board meeting on Thursday, although this was announced after the market’s 3:30 p.m. close.
All sectoral indices ended in positive territory, led by holding firms which soared 2.21% or 171.14 points to 7,894.76. Property followed with a 1.26% gain or 50.89 points to 4,087.91.
Services rose 0.63% or 9.97 points to 1,591.61; mining and oil gained 0.48% or 40.34 points to 8,364.20; financials firmed up 0.39% or 6.99 points to 1,782.29, while industrials added 0.08% or 9.73 points to 11,655.01.
Turnover slightly went up to P5.66 billion after some 1.42 billion issues switched hands, from Wednesday’s P5.46 billion.
Foreign investors turned buyers, posting net purchases of P147.01 million versus the previous session’s P370.72-million net sales.
Advancers swamped decliners, 124 to 76, while 43 names were unchanged.